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It started at General Dynamics Corp. with a customer complaint. About a year ago, Chauncey Morris, a regional supervisor with the government contractor, got a call from a client. Apparently, one of General Dynamics' field technicians wasn't spending his days fixing problems. "The customer complained that the tech wasn't working," says Morris. "Instead, he was sitting in a cubicle, messing around with chat programs."

Morris had already noticed the employee's cellular-phone and pager bills skyrocketing a few months earlier. Given that training a new technician would cost $10,000 to $15,000, however, Morris decided to see for himself what the putative loafer was up to before making any rash decisions. Morris asked the technician to send his laptop to the main office, claiming that it needed a software update. Once Morris had the computer, he installed SpectorSoft's eBlasteran application that records every keystroke, Web site, and chat session, then e-mails detailed reports back to a remote e-mail address.

27% of companies have dismissed employees for misuse of the Internet or e-mail.

Source: American Management Association, 2001.

Within a day, Morris received his first set of e-mailed logs. "He was having an affair. He was spending hours in chat rooms and sending e-mails," says Morris, who reminded the employee of the company's acceptable-use policy.

If you think this scenario is unique, think again. More than 14 million Americans are under continual electronic surveillance by their employers, who not only watch e-mail, chats, and Web traffic but also look into employee files, according to a July 2001 report issued by the Privacy Foundation, a Denver-based advocacy group. In some cases, the monitoring is reactiveas was the case with General Dynamics. Most of the time, however, companies watch their workers hoping to nip problems in the bud.

Any machine that belongs to a company is fair game. The company doesn't need a warrantor your permission. And it definitely doesn't have to tell you what it is up to as long as it applies the same standards to your coworkers. "The company you work for owns your machine, so whatever you do, you're not only doing it on their time, you're also doing it on their gear," says Eric Hemmendinger, a research director with Aberdeen Group, a technology consultancy. "If you want to keep something private, do it elsewhere."